QUESTION 11

1. An investor, by investing in combinations of stocks, develops a ____ portfolio.

   	a.	energetic
   	b.	diversified
   	c.	structured
   	d.	simple

1 points

QUESTION 12

1. The ability of an investor to buy and sell a company's securities quickly and without a significant loss of value is known as the ____ risk.

   	a.	financial
   	b.	marketability
   	c.	security
   	d.	business

1 points

QUESTION 13

1. According to the ____, long-term interest rates are a function of expected short-term interest rates.

   	a.	expectations theory
   	b.	maturity theory
   	c.	market segmentation theory
   	d.	preferred habitat theory

1 points

QUESTION 14

1. Efficient current assets management refers to the firms ability to economize on which of the following?

   I. Inventory

   II. Marketable securities

   	a.	Neither I nor II
   	b.	Both I and II
   	c.	Only II
   	d.	Only I

1 points

QUESTION 15

1. Which of the following is not one of the advantages of share repurchase as a dividend decision?

   	a.	All current shareholders can sell their shares at a higher price.
   	b.	It effectively converts dividend income into capital gains income.
   	c.	It represents a signal to investors that the company expects higher earnings in the future.
   	d.	It provides firm with greater financial flexibility in timing the payment of returns to shareholders.

1 points

QUESTION 16

1. Which of the accounts listed is not part of a firm's working capital?

   	a.	Plant and equipment
   	b.	Marketable securities
   	c.	Cash
   	d.	Accounts receivable

1 points

QUESTION 17

1. If a firm shows a profit on the quarterly income statement, then _____.

   	a.	there will be no need for additional financing
   	b.	the firm may need additional financing
   	c.	the firm will increase its cash balance
   	d.	All of these may be correct

1 points

QUESTION 18

1. A firm's cash conversion cycle is equal to its operating cycle minus its ____.

   	a.	inventory conversion period
   	b.	receivables conversion period
   	c.	payables deferral period
   	d.	None of these are correct

1 points

QUESTION 19

1. Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:

   Price	Rate of Return	Probability
   $16	20%	0.25
   $20	0%	0.30
   $24	+20%	0.25
   $28	+40%	0.20

   Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the expected rate of return on Phoenix Stock.

   	a.	10%
   	b.	40%
   	c.	8%
   	d.	0%

1 points

QUESTION 20

1. Sorsi has declared a 15% stock dividend. If the stock was selling for $34 before the ex-dividend date, what should its price be on the ex-dividend date?

   	a.	$28.90
   	b.	$34.00
   	c.	$29.57
   	d.	$30.91

1 points

QUESTION 21

1. Total risk of a security can be viewed as consisting of two parts. Which of the following apply?

   I. verifiable risk

   II. non-verifiable risk

   	a.	Neither statement I nor II is correct.
   	b.	Both statements I and II are correct.
   	c.	Only statement I is correct.
   	d.	Only statement II is correct.

1 points

QUESTION 22

1. An increase in uncertainty regarding the future economic outlook has the effect of ____.

   	a.	increasing the slope of the security market line
   	b.	shifting the security market line upward
   	c.	reducing risk
   	d.	None of these are correct

1 points

QUESTION 23

1. Under a conservative approach to working capital management, a firm tends to hold a relatively ____ proportion of its total assets in the form of current assets.

   	a.	constant
   	b.	stable
   	c.	large
   	d.	small

1 points

QUESTION 24

1. Which of the following does not contain restrictive covenants?

   	a.	Preferred stock agreements
   	b.	Agency restrictions
   	c.	Bond indentures
   	d.	Lease contracts

1 points

QUESTION 25

1. Richtex Brick has a current dividend of $1.70, and the market value of its common stock is $28. The expected market return is 13%, and the risk-free rate is 9%. If Richtex stock is half as volatile as the market, and the market is in equilibrium, what rate of growth is expected for Richtex's dividends assuming a constant growth valuation model is appropriate for Richtex?

   	a.	4.93%
   	b.	5.37%
   	c.	5.41%
   	d.	4.65%

1 points